Managing Fixed Assets

For Canadian retailer Princess Auto (Winnipeg, Manitoba), one of the biggest challenges has been managing the movement of fixed assets and non-capitalized items within its dynamic portfolio. The retailer, which carries unique hardware, hand tools and large equipment such as log splitters and air compressors in its 28 locations, is renovating and expanding stores as well as opening three new stores this year.

“We are constantly moving assets from location to location and it’s imperative that we keep track of what goes where,” explained Edward Chrobak, corporate accountant at Princess Auto.

Computer equipment, store fixtures and fittings, shelving, signage, machinery and motor vehicles are among the fixed assets that merit monitoring. Non-capitalized items that are expensed and have a unit cost of less than $1,000, such as mobile phones and handheld devices, also need to be tracked.

This summer, the retailer began implementing asset-management software from Real Asset Management International (RAMI). In this first phase of implementation, Princess Auto will deploy Asset4000, to monitor fixed assets; Lease4000, for land and buildings; and Document4000, for contracts, purchase orders and invoice records. Phase 2 of the implementation will include Inventory4000, for non-capitalized assets, and Project4000, for managing new-store openings and expansions.

The RAMI suite can be deployed over a wide-area network (WAN), local-area network (LAN) or through a fully Web-based system. Princess Auto chose to deploy it over a client-server LAN. The system, which can typically be implemented in one to three months, is very flexible and scalable, enabling Princess Auto to add new entities, stores, departments or divisions without assistance.

“Our stores will not need to access these tools so there was no reason to do the Web-based system,” noted Chrobak. “The information is all on our internal server and access is identity controlled by password. We can monitor not only where and when assets are moving, but also who is moving them—you don’t get that visibility with a spreadsheet.”

Editorial Correction

When the chart below appeared on page 154 of the Chain Store Age July issue, some of the data was missing. The information, which illustrates the operating earnings per square foot of large-format retailers, was provided by Customer Growth Partners of New Canaan, Conn.

In addition to better utilization of its assets through the centralized group-wide visibility provided by the RAMI tools, Marcus Scholes, RAMI’s VP of U.S. operations, based in Des Moines, Iowa, suggested that Princess Auto can expect lower cost of asset ownership, reduced insurance premiums, improved management of insurance claims, and shorter month-end and year-end procedures.

“Improved corporate governance is another benefit,” said Scholes. “After events like Enron, auditors are keen to see companies have professional asset-management systems with proper audit trails and comprehensive reporting functions. It is not necessarily all about saving money—it’s about having confidence in the balance sheet.”

However, there are also strong financial arguments for asset-management systems. For example, Scholes cited a European supermarket chain with more than 400 stores and roughly 500,000 assets that saved more than £7 million in the first year following its implementation of RAMI’s Project4000.

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